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Toyota investing on big things in Thailand

Auto giant’s big year in 2012 follows a string of record performances in the Kingdom

The year 2012 was a historic year for the Thai automobile industry – with total production of over 2 million units and domestic sales of over 1.4 million units.

Toyota Motor Thailand (TMT)’s record sales of 516,086 units is considered a new marker in the Kingdom’s auto history as well.

This is the first time that auto giant Toyota has been able to break the 500,000-unit mark, after the previous high of over 300,000 units in 2010. That year the Thai auto industry, which had gone through lots of ups and downs in the past, also achieved record sales of 750,000 units.

This may not sound like an important issue at first, but it is important to understand how Toyota became the first (and probably the only) company that has been able to reach this point.

TMT president Kyoichi Tanada said Toyota has set a sales target of 500,000 units for 2013 – down by a small 3.1 per cent compared to last year. Market share is expected to rise to 40 per cent, up from last year’s 35.9 per cent. The company plans to sell 200,000 passenger cars, down 11 per cent from 2012 but expects its market share will rise to 36.9 per cent from last year’s 33.4 per cent. It also plans to sell 285,000 pickup trucks, increasing by 5.6 per cent and with market share rising from 40.5 per cent to 45.1 per cent.

“The total auto market should reach 1.2 million units this year, down 10 per cent from 2012. There are still approximately 300,000 back orders from the First Car Buyer program, which means that the true sales figure for this year is no more than 1 million units. This is according to the market mechanism and the direction of the Thai economy, which continues to grow from last year. Sales (for this year) will be divided into 542,300 passenger cars, down 19.4 per cent, and 631,900 pickup trucks, down 5.1 per cent,” he said, adding that Toyota’s highlight for 2013 will be its Eco Car.

Toyota plans to build its second assembly plant at the Gateway Industrial Estate in Chachoengsao with an investment of Bt12 billion in order to raise capacity for passenger cars including the Eco Car, which will be launched during the third quarter of the year. This will raise production at the Gateway complex from 220,000 to 300,000 units per year. Production at the new plant is expected to commence during mid-year. Meanwhile, Toyota is also investing in Indonesia, but will not spend anymore during the next 2-3 years.

Another Bt20 billion on its way

In fact, Toyota has plans to invest as much as Bt20 billion to build a new plant in order to raise capacity to 1.2 million units per year within the next five years, and promote Thailand as its regional and global production hub.

Tanada said late last year that he was highly satisfied with two major issues that has been successfully completed, leaving the last hurdle of pushing Thailand to its highest limits.

The Gateway investment will raise Toyota’s production capacity in Thailand close to one million units within the next two years. It is also planning to expand the Ban Pho plant in Chachoengsao, which manufactures vehicles from the IMV 2 project as well as other models.

This will give Toyota a capacity of 1.2 million units within the next five years, he said.

“For the plant, we will use space at the old plant in Samrong, Gateway and Ban Pho. The Ban Pho plant has a large amount of space that we can expand in. The Gateway plant will be expanded for the Eco Car, while the Ban Pho plant is for pickups and the Samrong plant is for vans,” Tanada said.

Last year Toyota also announced that it would spend Bt16 billion to produce diesel engines for the new Hilux pickup and Fortuner PPV. The engine plant is expected to be completed in 2015.

In 2012 Toyota also expanded passenger car production at the Gateway plant with a second factory, raising capacity to 100,000 units per year. It also spend additional investment at the Thai Auto Works plant to produce 20,000 units per year of new models that are currently not assembled in Thailand.

It can easily be said that as much as 40 per cent of the trillions of investment that took place during the last five decades in the Thai auto industry belongs to Toyota.

And this also reflects Thailand’s importance to this giant auto maker, as a major global production and export hub.